Public-private pay gap varies greatly by education level

Though federal employees on average make more than their private sector counterparts, the story changes when the statistics are broken down by education level, according to a new study by the Congressional Budget Office.

In a comparison of civilian federal employees to private sector workers with similar observable characteristics, CBO found that federal workers come out on top in average wages (2 percent higher), benefits (48 percent higher) and total compensation (16 percent more).

CBO analyzed payroll data from 2005 to 2010 among both groups of employees based on similar occupations, employer size, demographics, geographic location and years of work experience, among other criteria.

After separating out the data by level of education, more distinctions became apparent. Federal civilian workers with only a high school diploma or less fared much better than private sector employees with the same: They earned 21 percent more wages, 72 percent higher benefits and 36 percent more in total compensation.

Government workers with bachelor’s degrees still did better, but not by as much. Though they earned roughly the same hourly wages, they made 46 percent more in benefits and averaged 15 percent higher total compensation than their private sector counterparts.

In contrast, among employees with a professional degree or doctorate, federal workers earned 23 percent less in wages and 18 percent lower total compensation, while receiving about the same benefits as the private sector employees with identical degrees.

In an accompanying blog post, CBO acknowledged that there are other, nonmeasurable factors at play in accounting for the pay gap. For example, CBO noted, “federal workers tend to be older, more educated and more concentrated in professional occupations than private sector workers.”

According to CBO, the average age of federal workers is four years higher than that of their private sector counterparts -- 45 years versus 41 years.

American Enterprise Institute scholar Andrew Biggs, formerly the deputy commissioner of the Social Security Administration, has performed his own pay gap research in the past and is pleased with CBO’s study.

“By and large, they went about it the right way because they looked at it from the point of view of the individual,” Biggs told Government Executive. He said he was glad to see findings of this nature coming from a government organization rather than a think tank because “it’s a little more difficult for public employee advocates to play the smear game.”

Biggs said pay variations offer proof that across-the-board federal employee pay cuts are not a feasible option. Any effective cuts would have to take education into account as well as demand for specific jobs, he argued.

American Federation of Government Employees National President John Gage, however, said the findings should have no bearing on how federal employees are paid.

“This CBO study answered an entirely academic and irrelevant question for federal pay policy,” he said in a statement. It “is probably interesting for academics, but its findings are completely irrelevant for determining wages or benefits for any group of employees.”

National Treasury Employees Union President Colleen Kelley said in a statement that she agreed with the finding that highly educated employees are paid less than their private sector counterparts, but added the report should not be considered a definitive statement on federal pay.

She said such studies support misguided efforts to decrease federal pay.

“An enormous amount of time and energy is going into studies purporting to show that federal workers are overpaid,” Kelley said. “It is just a foolish drive for the lowest common denominators, and is missing the big picture -- which is what are we going to do to put people back to work and accelerate the economic recovery?”